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11 Cards in this Set
- Front
- Back
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Income |
Monetary inflow over a period of time |
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Circular flow of income |
Flow of spending and income within an economy |
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Injections, definition and three |
Additions of money to the circular flow, government spending, business investment, exports |
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Withdrawals and three examples |
Leakages of money from the circular flow, tax, savings, imports |
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Equilibrium level of real national output |
Where AD=AS and there is no tendency to change. Identifies the price level and real GDP of a country |
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Multiplier ratio |
The rate of change in equilibrium real income to the autonomous change(injection) that occurred |
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MPC |
Marginal propensity to consume, % of extra pound earned is spent within the economy |
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MPS |
Marginal propensity to save- % of an extra pound earned is saved within the economy |
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MPW |
Marginal propensity to withdraw= MPS+MPT+MPM |
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Three formulae for the multiplier |
- 1/MPW - 1/MPS+MPT+MPM - 1/(1-MPC) |
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The multiplier effect |
When a change in injection leads to an even bigger change in real GDP |
